The statement outlines the prohibition of “abusive conduct” in consumer financial markets and a framework for federal and state regulators to identify such conduct. Comments are due July 3.
04/05/2023 3:55 P.M.
2 minute read
The latest policy statement from the Consumer Financial Protection Bureau “explains the legal prohibition on abusive conduct in consumer financial markets and summarizes over a decade of precedent,” under the Consumer Financial Protection Act, according to a news release.
The bureau reports the policy statement “will assist consumer financial protection enforcers in identifying wrongdoing and will help firms avoid committing abusive acts or practices.”
It notes that while policy statements provide background on laws enforced by the CFPB and how they are enforced, they do not add new legal requirements for regulated entities.
In this policy statement, the CFPB outlines how “abusive conduct” mainly includes “obscuring important features of a product or service or leveraging certain circumstances—including gaps in understanding, unequal bargaining power, or consumer reliance—to take unreasonable advantage. In particular, the statement describes how the use of dark patterns, set-up-to-fail business models like those observed before the mortgage crisis, profiteering off captive customers, and kickbacks and self-dealing can be abusive.”
According to a summary of the policy statement from ACA International member firm Barron & Newburger, “the guidance raises concerns about how businesses can effectively use information that is available to them in a world of poor consumer literacy.”
Read the CFPB’s complete policy statement here. It’s also published in the Federal Register and available for public comments until July 3, 2023.
Related Content from ACA International:
CFPB Circular Outlines Enforcement of “Dark Patterns”
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